The net profit stood at Rs126 crore for the quarter ended 31 December compared with Rs322 crore a year ago, the bank said.

“The net profit has declined to 61%, mainly because of ageing provision on the treasury. Hence we had to make Rs74 crore provision on treasury bonds which affected decline in profits,” Canara Bank Limited managing director and CEO Rakesh Sharma told reporters.

“However, it is only a provision. Let us see how the yields move in the next quarter. Accordingly, we will take a view to make adjustments,” he told PTI after announcing the results in Bengaluru.

Sharma said the gross NPA ratio stood at 10.38%, down sequentially from 10.51% as on September 2017, while net NPA stood at 6.78%, down sequentially from 7.02% as at September 2017.

The net interest margin improved to 2.64% domestically and 2.39% globally, he added. The cost of deposits came down by a healthy 72 bps to 5.59% from 6.31%, Sharma said.

He also said net interest income growth of 52.4% and 11.29% growth in non-interest income, excluding trading profits significantly shielded them from unexpected quarter-end surge in bond yields and resultant market-to-market provisions.

The banks strenuous efforts for recovery has resulted in improved recovery under stressed assets,especially written off assets, thereby improving the bank’s non-interest income, he said.